But he said company officials still must agree to requested improvements in financing and governance to gain support from the Peninsula mayors' water authority.

"I want to keep an open mind until the water authority makes a decision, but the Cal Am project is clearly the project that's furthest along and we're working on improving that project," Burnett said. "Cal Am's project can be better, and some aspects of it are not good enough yet."

Cal Am spokeswoman Catherine Bowie said company officials are continuing to engage the mayors in talks about financing and governance, and said they "feel the discussions are going very well."

"We appreciate the efforts of the (authority) to lower costs to our customers and involve local leaders," Bowie said, "and are hopeful our discussions will result in broader support for our proposal."

Burnett, the authority's vice president, has taken a lead role on local consideration of competing desal proposals. He said Cal Am would still need to agree to the authority's public governance proposal and five key financing principles — including acceptance of a public contribution, perhaps a surcharge on water bills, designed to lower overall costs by an estimated $124 million — before the authority could formally recommend Cal Am's project to the state Public Utilities Commission next month.

Otherwise, he said, the authority would be forced to demand that the PUC require Cal Am to include the financing and governance proposals.

Burnett said he doesn't believe public ownership of the desal plant would offer any additional benefits beyond the financing and governance demands.

Burnett said he believes a deal with Cal Am is imminent on a public governance structure, which also earned support from the Monterey Peninsula Water Management District and the county Water Resources Agency. However, he said a controversial confidentiality clause proposed by Cal Am is unworkable.

The authority's proposal calls for forming an oversight committee with varying degrees of input on virtually every aspect of Cal Am's project, and the two sides are trying to work out exactly how much control the committee would have.

Divide over financing

Negotiations over project financing, on the other hand, may be further away from a conclusion, as the two sides appear to be at odds over key elements.

Burnett said Cal Am President Rob MacLean indicated he supported the authority's proposals but the company's board did not agree. As a result, Burnett said his request for the proposals to be included in the company's supplemental testimony filed with the PUC last week was not granted.

Burnett said that was a disappointment, but expressed optimism that a deal could still be worked out by next month.

In its Jan. 11 supplemental testimony filing, Cal Am indicated it is still negotiating with the authority and its public agency partners on a "potentially acceptable compromise" involving financing and governance, but rejected Burnett's preferred "net present value" method for calculating the project's cost.

Burnett defended the use of that method, saying it is the current federal government standard for a fair comparison of project costs. He criticized MacLean and other company officials' suggestion that the project's interest rate would average about 4 percent overall, and suggested Cal Am was "playing with the numbers."

"We will continue to advocate for the most transparent way of calculating the project cost," Burnett said.

Burnett and Monterey Mayor Chuck Della Sala, the authority's president, have been in talks with Cal Am for months about the suggested improvements, and there has been some criticism that the authority appears to have already decided to back Cal Am's bid while appearing open to alternative proposals.

Burnett made his comments a week after the authority outlined its strategy for deciding which of three alternative projects to formally recommend to the PUC in late February, and a few weeks before the authority officially makes its choice.

Evaluating projects

Last week, the authority released a proposed evaluation matrix that it sent to its own technical advisory committee, the water management district and its desal project consultant, Carlsbad-based Separation Processes Inc., for use in developing a final recommendation.

The matrix includes sections for evaluating the projects' capital and operating costs, interest rate, financing, access to low-interest state loans, permitting and schedule, technical feasibility, legal issues, and ownership and management.

The authority has already spent about $87,000 on consultants, including $73,000 for SPI, to do comparison analyses of the three desal projects: Cal Am's proposed plant north of Marina and two others in Moss Landing.

In its final report, SPI found that Cal Am's project would be considerably more expensive to build than the other two, although it would be the quickest to be completed and the only one capable of meeting the Jan. 1, 2017, state deadline for a major reduction in pumping from the Carmel River.

However, those assumptions were based on data already months old when the report was released last month, and Cal Am officials have acknowledged that its project now won't be finished until December 2017 at the earliest because of delays related to a slant test well for the desal plant's source water. Cal Am officials also say they believe their desal plant's cost will actually be cheaper than the alternatives when factoring in lower power and financing costs.

In addition, the authority and the water management district are sharing the $25,000 cost of another consultant charged with conducting a detailed financial analysis of the three proposals.

Burnett said the authority would likely aim for choosing a project to recommend by the end of this month, perhaps in a special meeting, to allow enough time for its consultants and other representatives to prepare expert testimony by the Feb. 22 deadline.